Norway and Tanzania: A partnership for the future

I would like to thank Norwegian Church Aid and World Wildlife Fund Norway for the opportunity to speak this morning. You have chosen a timely date for this conference - exactly a year before the next general elections in Tanzania.

I have just returned from visit to three African countries. I visited Angola for bilateral talks, and to support Norwegian private sector engagement in the country. I went to South Sudan to follow up on our humanitarian engagement there and discuss the political and development challenges ahead. I have also been to Ethiopia, an important partner country for Norway. Ethiopia has set ambitious climate resilience targets and has adopted a green growth strategy, and could be a model for other countries wanting to adopt green growth strategies.

What I am trying to convey with this is that our engagement with countries in Africa is multi-faceted. Our relationships with a growing number of African countries are evolving into partnerships based on a common interest in promoting trade and investments for our mutual economic benefit, while also addressing the challenges of global public goods and sustainable development.

Several of the fastest growing economies in the world are in sub-Saharan Africa. According to the IMF, growth is expected to remain strong in the region, at about 5 % in 2014 and 2015. There is good reason to believe that the greatest rise in income levels in the coming decades will be in Africa. Many African countries are likely to move into the middle-income bracket.

However, rather than being overly optimistic, we should be realistic. The overall positive outlook has recently been overshadowed by the Ebola outbreak in Western Africa. It is exacting a heavy human and economic toll. Even in countries not affected, the impact on trade, tourism and investment confidence can be felt.

Peace and political stability are of vital importance. Security concerns in some parts of Africa are worrying and may have further regional implications if not dealt with.

Africa is the second largest, second most highly populated continent on earth. The population is young: 40 % of all Africans are under the age of 14. These young people are a valuable human resource. However, absorbing all these young people into the labour force is an enormous challenge, even for economies with a high growth rate. Inclusive growth is dependent on job creation – the main step towards eradicating poverty.

A large part of the economic growth in Africa is based on the export of raw materials. The oil and gas industry provides income to the Treasury, but does not create many new jobs - especially for unskilled workers. Revenue from the petroleum sector must be invested in education, health and infrastructure if it is to contribute to long-term development and significant job creation.

Tanzania must also ensure a good framework and legislation for private investment, and fight against capital flight.

A rapidly growing population may lead to further economic growth - if young people find work. 600 million new citizens of the world will look for work before we reach the year 2020, and many of these people will live in Africa. Most will have to find jobs in the informal sector, where 80-90 percent are working today. A relevant education and good health will make it easier for young people create their own jobs. If young people can not find something meaningful to do with their lives, the risk of political and social unrest will increase.

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I would like to like to mention some important aspects from Norway’s newly presented central government budget for 2015. The Government has presented a budget with clear priorities. We propose an increase in the development budget to NOK 32.5 billion in 2015. This is an increase of more than NOK 1 billion compared to 2014.

Education, humanitarian aid, health and vaccines, business development, climate measures and human rights are areas of high priority, asthese are all crucial for poverty reduction.

We intend to pursue an effective development policy that yields results. In 2013, 116 countries received aid from Norway. In order to attain better results, we are proposing to concentrate our efforts on 84 countries, and we have identified12 focus countries where efforts will be particularly strengthened.

The Government has proposed a substantial increase in the support for education in developing countries. This will mean an allocation of almost NOK 2.4 billion for education in 2015. In June this year we presented a white paper on global education to the Storting. Norway attaches great importance to the links between education and global health, which is another area where we are significantly stepping up our efforts next year. We place particular emphasis on education for girls. A girl with an education tends to marry and have children later, which helps to reduce child and maternal mortality.

Education also goes hand in hand with private sector development, a core priority in our development cooperation. There is a need to ensure that the skills that are learned are in line with employers’ actual needs. Trade and the private sector are vital for growth and lasting change in developing countries. We believe the Norwegian private sector can play an important role. Norwegian industry has expertise that is highly sought after in Africa, not least within the energy sectors. A white paper on the role of the private sector in development cooperation and a white paper on Trade and Globalisation is in progress and will be presented to the Storting next year.

We also need a joint effort to tackle climate change – another area where we have a close dialogue with African partners.

Human rights remain at the heart of the Government’s international development agenda. Safeguarding human rights is essential for the inclusive political and economic development of a society. We will soon present a white paper on human rights to the Storting.

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Tanzania

How are these political priorities reflected in our engagement with Tanzania?

In the Government’s 2015 budget proposal, Tanzania is identified as one of the 12 focus countries that will be given priority in Norway’s development efforts.

Norway and Tanzania have enjoyed close relations since Tanzania gained independence in 1961. Thus Norway has in-depth knowledge of the country and will be in a good position to contribute to concrete results. Both countries will benefit from further cooperation. Through our long-term development cooperation we have built mutual trust and confidence. This provides a firm foundation for our continued cooperation. Relations have been built at all levels: between heads of state, within civil society, and between thousands of individuals from both countries. All have a unique story to tell.

Tanzania’s vision is to become a middle-income country by 2025. Until recently, few economists thought that would be possible. But in 2012 petroleum companies found large quantities of gas off the coast of Tanzania, which now has the prospect of becoming a gas economy.

Tanzania’s economic situation has improved considerably since the 1990s. Reforms and better discipline within economic policy have contributed to economic growth. The current favourable outlook, which is partly driven by large investments in the energy sectors, makes Tanzania’s vision ambitious, but possible to reach.

The discovery of natural gas by Statoil and other companies is important. The gas sector alone is responsible for substantial growth in foreign investment in Tanzania. Once gas resources are fully developed, tax revenues are estimated to reach USD 2.5-5 billion per year, depending on gas prices and production costs.

However, the final decision has not yet been made as to whether to invest in developing the gas fields. The gas project is challenging, both technically and financially. The political will and capacity of the authorities will be crucial for the project's feasibility.

Having said this, we must not forget that Tanzania is still a poor country. An abundance of natural resources can sometimes become a curse rather than a blessing. Norway wants to help prevent this from happening in Tanzania. We stand ready to share our experience of how to manage natural resources to the benefit of the people.

Today, two thirds of the population of Tanzania live below the international poverty line of USD 1.25 per day. However, a recent national poverty assessment indicates a positive trend. Since the millennium, Tanzania has performed well on the human development index. Life expectancy has increased. The infant mortality rate has declined. And 8 of 10 people can now read and write.

Tanzania has bright prospects of resolving its remaining development challenges. This will require continued high rates of economic growth, combined with government efforts to increase domestic revenue collection.

One big challenge will be to create enough job opportunities for the 800 000 young Tanzanians entering the labour market each year. Inclusive growth that includes the creation of jobs for the young population is a precondition for stability. If Tanzania succeeds in attracting private sector and foreign direct investment that yields productive jobs for Tanzanians, this will strongly contribute to eradicating poverty.

Peace and political stability is perhaps Tanzania’s most important asset. Tanzania has traditionally been perceived as a peaceful corner in an unstable region. As with any other asset, it must be protected in order for it to last. Tanzania’s traditional social cohesion is challenged by growing economic disparities and greater religious and political tensions. The constitutional review process was an exercise in citizen participation. The political debate has been polarised. The general election in October 2015 will be a test of the maturity of Tanzania’s democratic institutions. It is important that the elections are free, fair and credible.

Norway, together with the UN and other partners, is working with the Tanzanian government and other stakeholders to promote good governance, democratic development and human rights.Norway’s support to national human rights organisations, the media and the UN is aimed at strengthening Tanzania’s democratic institutions, strengthening popular participation and ensuring accountability.

Norway and Tanzania’s strong partnership can help Tanzania achieve its high ambitions in the energy sector. Through the Oil for Development programme, Norway aims to promote responsible economic, environmental and social management of petroleum resources. We support both government bodies and independent research institutions and civil society organisations. Increased knowledge and expertise in this area are essential for the Tanzania gas project to become a reality.

Turning to the current energy situation for the people of Tanzania: 75% of the population does not have access to electricity. The electrification rate is only 7% in the rural areas. Our cooperation in the renewable energy sector aims at increasing the viability of the power sector. This is essential for industrialisation and the domestic use of gas, as well as for Tanzania’s high ambitions to increase access to electricity to 75 % by 2035.

As a part of the clean energy initiative, Norway is supporting a project at the Arusha Technical College to rehabilitate a hydropower plant. This also entails the establishment of a training centre for hydropower technicians. The project aims to increase the supply of clean energy for Tanzanian businesses and households. It will also provide young people with a profession and the industry with skilled labour that is in great demand.

With regard to the environment, Norway’s cooperation with Tanzania is mainly focused on the International Climate and Forest Initiative, REDD+. A recent report concluded that Tanzania is not yet ready for a performance-based mechanism. On the positive side, the pilot projects under the REDD+ schemes have had a favourable impact on the conservation of biodiversity, increased fire management efforts, and employment opportunities. Several of the pilot projects have reported emission reductions.

An exciting initiative related to private sector development in Tanzania is the Southern Agricultural Growth Corridor of Tanzania. This initiative was launched with the support of many partners, including the Government of Tanzania, the Government of Norway, and the Norwegian company Yara. This inclusive, multi-stakeholder partnership aims to develop the region’s agricultural potential. It seeks to transform the agriculture sector of Tanzania over 20 years by building inclusive agribusinesses. The risk-sharing model of a public-private partnership approach is the first of such a scale in Tanzania’s agricultural history.

These are some examples of Norway’s current engagement in Tanzania. Looking ahead, we will further strengthen our efforts to support Tanzania on the road towards middle-income country status and reduced aid dependence. This includes an increased emphasis on private sector development and mutually beneficial economic relations.

The increase in foreign direct investments to Tanzania reflects the new economic opportunities. Several major Norwegian companies, including Statoil, Yara and Aker Solutions, have recognised the opportunities in Africa and have established a presence in Tanzania. Statoil’s discoveries of commercially viable gas reserves offshore were made possible by the advanced Norwegian drilling technology used by a range of companies in their exploration activities.

Statoil’s engagement in Tanzania is likely to attract other Norwegian investors in the supply and service sector to the petroleum industry. We believe they have a lot to offer in terms of technology transfer and by being responsible partners.

In our dialogue with the Tanzanian Government, we will also emphasise regional and global issues where Norway and Tanzania have mutual interests and should join forces. These include climate issues, the Sustainable Development Goals, and the fight against terrorism.

To conclude: Norway stands ready to support Tanzania in its vision to become a middle-income country by 2025. We look forward to deepening our relations with Tanzania, with increased emphasis on mutually beneficial economic relations and other common interests, and on focusing and strengthening our development cooperation.